Minister’s Housing Allowance Ruling Reversed

Category | Church Finance

On November 13, 2014, a federal appeals court reversed the 2013 ruling by a federal district court in Wisconsin striking down the minister’s housing allowance as an unconstitutional preference for religion. Although the original ruling applied only to credentialed ministers in Wisconsin, Illinois, and Indiana, it set a precedent for possible nationwide implication for ministers who benefit from the federal income tax break provided by the allowance. 

This reversal is good news for ministers, but it should be noted that the appeals court did not address the constitutionality of the housing allowance in its ruling, but rather concluded that the plaintiffs, the Freedom from Religion Foundation and two of its officers, lacked standing to challenge it.

According to Richard Hammar, author of Church Law & Tax Report, “Standing is a constitutional requirement for anyone bringing a lawsuit in federal court and generally means that a plaintiff must experience a direct injury. The Wisconsin court concluded that the plaintiffs had standing due to their ‘injury’ of being denied a housing allowance exclusion should they claim one on their tax returns. But the appeals court refused to base standing on theoretical injury.”

Although an appeals court may eventually rule the housing allowance unconstitutional, that ruling would likely be appealed to the U.S. Supreme Court, which accepts less than 1% of all appeals for consideration. In short, for the foreseeable future, ministers can continue to enjoy this benefit.

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